AI Agents vs. Chatbots: Why Agentic AI is the Future of Customer Engagement

People crave genuine conversations, both in the real world and online. They desire businesses to anticipate their needs, communicate in their language, and truly understand them.

This shift presents a challenge for brands, especially ones relying on traditional chatbots as quick replies to simple questions aren’t enough anymore.

Despite chatbots’ utility — they automate repetitive tasks, reduce support queues, and allow human agents to focus on complex queries —  they were never designed for the nuanced, emotionally intelligent conversations customers expect today. 

That’s why AI agents are entering the picture. These new intelligent systems are proactive, contextual, and emotionally aware. And unlike chatbots, they can act autonomously to deliver actual outcomes without needing to be prompted at every step.

In this article, we’ll explore how AI agents differ from chatbots and why the shift to agentic AI is a game-changer for customer engagement. 

We’ll also show how Insider’s purpose-built agents can help your business deliver exceptional shopping experiences, manage front-line support, and uncover campaign insights.

To learn more about our Agentic AI offerings, visit our website or schedule a demo with our team.

What’s the difference between chatbots and AI Agents?

Anyone who’s bought anything online has likely interacted with chatbots. They’re good tools for greeting customers, answering preset questions, and handing cases off to a human when things get complicated.

An AI agent, on the other hand, can understand intent, pull in real-time data, make smart decisions, and resolve complex issues — all in one fluid interaction. That’s a significant leap in capability, so let’s break it down in a bit more detail.

What is a chatbot?

A chatbot is essentially a scripted responder. Most chatbots are built on decision trees or flowcharts that guide a user down a predefined path. They’re useful for basic inquiries, like “What are your store hours?” or “Where’s my order?”

However, once a customer asks something outside those scripts, the experience often deteriorates. Responses become generic. Frustration sets in. And if the chatbot can’t escalate correctly, the interaction might end in a lost sale and an angry customer.

In short, chatbots are reactive, rigid, and rarely impressive outside of their predefined scope.

What is an AI Agent?

AI agents are built to think. They use machine learning, historical and contextual data, and natural language processing (NLP) to interpret what a customer means, not just what they say.

They don’t just respond, they analyze and follow goals. They also aim to achieve outcomes, rather than simply responding to prompts or user queries.

Take Insider’s Agent One™ as an example. We offer three specialized AI agents that are fully integrated across customer touchpoints and workflows:

1. The Shopping Agent helps customers find what they need with personalized, intent-based recommendations.
2. The Support Agent uses real-time data to answer questions and solve customer problems on the spot.
3. The Insights Agent gives marketers a real-time pulse on performance, with actionable insights and recommendations.

We’ll explore these in more detail later. For now, it’s important to remember that each one is focused on a clear outcome, used with key customer data, and integrates with other solutions to guarantee a consistent and personalized experience across all channels.

The shift from prompting to Agentic AI

At the core of the new Agentic AI wave is the move beyond pushing or prompting systems.

Traditional chatbots and even earlier AI systems required prompting to provide the necessary results, like asking ChatGPT to solve a task based on a desired outcome. As a result, these AI systems could deliver productivity and efficiency benefits, but only when asked the right questions, which usually required rounds of prompting.

Agentic AI changes that dynamic. Instead of waiting for instructions, AI agents can take initiative to interpret signals, predict goals, and act proactively to move the customer (and the business) forward.

All three of the agents we mentioned in the previous section excel in this regard. For example:

• The Shopping Agent anticipates what a customer needs, based on behavioral cues and contextual data. Then, it provides dynamic suggestions that increase purchase confidence and conversions.

• The Support Agent provides personalized, real-time support driven by context-aware dialogue. It can be both reactive and proactive, instantly responding to customer queries and offering solutions without always being prompted to.

• The Insights Agent helps marketers by accelerating processes, predicting anomalies, and delivering powerful analytics. This enables teams to craft superior campaigns and detect issues before they affect the business.

4 things AI Agents can do that chatbots can’t

Now that you know the differences between AI agents and chatbots, let’s explore why the former are a superior option for customer engagement. 

1. They can make autonomous decisions

In the vast majority of cases, traditional chatbots wait for input. AI agents don’t have to.

Let’s say a customer has just abandoned a cart. A chatbot might send a generic message later if it’s been set up to do so. However, an AI Agent can act immediately to prevent a lost sale.For example, Insider’s agents can pull data from our customer data platform (CDP), a CRM, customer service software, and hundreds of other sources. This lets them understand the customer’s history, recognize what triggered the abandonment, and trigger helpful nudges in real time on the customer’s preferred channels.

That’s the key difference between reacting and anticipating, which is often everything in customer engagement.

That’s also why giant retailers are adopting or preparing to adopt this technology at scale. For example, Walmart is building its own shopping agents that customers can access on its app and website. 

Beyond answering standard questions and completing repetitive tasks, these agents will handle nuanced and complex tasks, e.g., filing up a shopping cart in response to a very broad prompt, like  “I want to plan a unicorn-themed party for my daughter,”

2. They get smarter over time

AI agents learn with every interaction. They understand what worked, what didn’t, and adjust accordingly. It’s continuous optimization, without constant manual input.

Again, our Shopping Agent is a great example. Since it can pull data from all relevant data sources, every interaction gives it a better understanding of customers’ needs, interests, and preferences. Over time, this leads to more accurate recommendations and an even smoother shopping experience for customers. 

This can make a massive difference when it comes to providing relevant product recommendations and accurate customer support answers.  

For example, Klarna deployed AI assistants powered by OpenAI across its business in 2024. Because they’re integrated across the entire organization (and can access lots of useful data), these agents got better at their jobs. Eventually, they started resolving customers’ errands in about 2 minutes on average, down from 11 minutes previously. 

3. They bring emotional intelligence into the equation

If you’ve ever had an extended conversation with a chatbot, you likely know the feeling of it missing the tone of your message or its goal completely. That can feel like talking to a brick wall, which in turn leads to frustrated and confused customers.AI agents are built to avoid that mistake. They understand natural language and analyze sentiment which allows them to detect urgency, frustration, or even excitement. Then, they respond in an emotionally appropriate way.

Put simply, when a customer indicates that they’re frustrated, the agent doesn’t offer a coupon. It provides empathy and then a solution. This emotional intelligence creates interactions that feel more human.

4. They connect across your entire ecosystem

Agent One™ solves the issue of data silos with deep integrations. Specifically, our purpose-built agents integrate with:

• eCommerce CDP and customers’ 360-degree profiles that contain their interactions, purchases, preferences, and much more.

• Personalized site search and merchandising platform, which boosts product discovery with AI-powered product recommendations.

• Smart Recommendation models, deliver tailored product recommendations and maximize cross-sell and upsell opportunities.

These deep integrations mean every agent has a complete view of the customer journey and can take action based on real-time insights. Again, this is far beyond the scope of traditional chatbots which are often siloed off from key systems or can’t turn the data into insights and act on it directly.

The bottom line: Agentic AI is the future

For years, businesses have been chasing the promise of “intelligent” customer interactions. But the gap between expectations and reality has been frustrating for brands and customers.

Chatbots were a step forward, but they’re not the final destination. As we just explored, AI agents represent a true paradigm shift. 

They can reason instead of merely replying. They don’t just follow instructions, they take initiative. And most importantly, they don’t just work in silos but operate as an integrated team focused on delivering valuable outcomes for customers and business.

That’s why this transition from scripted tools to autonomous agents isn’t just a technological upgrade. It’s a strategic one. In a world where customer experience defines brand loyalty, the companies that win will be the ones that move first and move smart.

So if you’re still relying on chatbots to power your customer engagement strategy, now is the time to rethink what’s possible.

Leverage Agentic AI today with Insider’s purpose-built agents

We’ve built the industry’s most aggressive AI roadmap for Insider to help brands stay ahead and offer the best possible experience to their customers. From automating routing tasks to handling complex conversations with care and nuance, our agents can help your brand convert, retain, and delight customers.

Specifically, Insider’s Agent One™ can:

• Integrate with relevant data sources, including 360-customer profiles from our enterprise CDP.
• Anticipate customers’ needs, understand the intent behind their queries, and provide relevant product recommendations.
• Turn your web search engine into an intelligent answer engine that delivers personalized conversations.
• Incorporate Insider’s predictive AI and Smart Recommendations to show relevant products and deliver more cross-sell and upsell opportunities.
• Manage front-line support by answering customer questions accurately 24/7, powered by CDP, CRM, and other relevant data sources.
• Uncover campaign risks, make recommendations and optimizations autonomously, and anticipate trends to improve performance. 

Lastly, Insider offers more than purpose-built Angetic AI. It’s a complete enterprise marketing platform that offers access to 12+ channels, industry-leading personalization capabilities, and marketing automation at scale.

To learn more about how Insider can help your business, schedule a free demo with our team.